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What Is the Best Way to Consolidate Credit Cards?

July 8, 2013, Written By Natalie Rutledge

If you are tired of paying on multiple credit card balances, it may be time for you to consider consolidation of your various debt. With credit card consolidation, you put all of your balances onto one card and then make the payments on that card until you have paid off all of your debt. This is easy to do in theory, but it can be costly if you don’t approach it in the right way. Before you take on any more debt, you need to ask yourself “What is the best way to consolidate credit cards?”

Finding the Right Card

The key to successful credit card consolidation is finding the right card to move all of your balances. There are three options to consider: balance transfer cards, low interest cards and one of your current cards. Here’s an explanation of the benefits of each:

Balance Transfer Cards

Every time you move a balance from one credit card to another, the receiving issuer is likely to charge a balance transfer fee for accepting the debt. Certain credit cards waive these fees to give people a chance to consolidate credit cards without incurring any costs. If you can find a card with no balance transfer fee, that will save you an average of 3% per transferred balance. In addition, a number of balance transfer cards have an introductory offer where you may not pay any interest for a number of months. This can save you a substantial amount of money. Make sure you thoroughly read and understand the terms and conditions of the new card.

Low Interest Cards

Low interest cards are great for credit card consolidation because of their low APRs. As an example, if you’re paying 19.99% interest right now, you can save a lot of money by switching to a card with an APR of 12.99%. Of course, your ability to transfer to this lower interest card will be determined by your credit score. If you have bad credit, you may not have the option to switch to a lower interest rate. You just have to see what cards are available for you.

Ideally, you need to look for a card that offers a low balance transfer fee and a low ongoing interest rate so you can save money during both the consolidation and through the repayment process. If you are not able to secure a card with these features, you essentially have to weigh your options and determine what will cost you the most amount of money. If you are going to take a long time to pay back your balance, you may be better off getting a low interest card and just eating the transfer fees. If you are going to pay back your balance quickly, you might save money by getting a card with no balance transfer fees and slightly higher interest.

Using a Card You Already Have

You might be able to save on some fees by moving all of your balances to a card you already have. This allows you to avoid having your credit pulled again, and it may give you a chance to avoid the balance transfer fees you may experience on another card. You have to make sure that this card has enough available credit to accommodate your other debts. If so, this may be the alternative for you.

Which of these three options is best will be determined by your personal financial situation. Do some mathematical calculations, figuring out how much you’ll pay on your current card, and how much you will save if you transfer your balances in each of these scenarios. Be sure to factor in the balance transfer fees and the introductory APR on the new card.

Consolidating Credit Cards

When it comes time to consolidate your credit cards, call up the companies that you no longer want to work with. Give them the information for your new card so they can charge it for the balance. Once that is complete, contact your new credit card company to ask if the balances have been moved over. If you’re using a different card from the same company, you may not have to switch phone calls to do this.

Note that it may take some time for your balances to appear. It may take anywhere from one to ten business days. If you want to watch your account online, you can check it every day and see when the charges come through.

Paying Back the Balances

Credit card consolidation doesn’t mean anything if you don’t use it to pay off your debts. You have to make a proactive plan to back down these balances so you can get your finances back on track. The sooner you pay off your debt, the less money you will pay in interest. You will also be able to take advantage of promotional rates that most cards offer for the first year of use.

Calculate how much money you can afford to pay on your balance each month, and strive to pay even more than that amount. Even something as small as an additional $50 month will make a big difference over time. Make micropayments on your card as often as possible. Stop charging anything new on your card–there is no reason to add to the balance unless it is an emergency. Don’t get caught up in the minimums. Those will give you false hope that you’re getting somewhere with your debt. The only real way to do it is to pay as much as possible as quickly as you can.

What is the best way to consolidate credit cards? Find the right alternative for you and then pay off the balance as soon as possible. If you can do that, you’ll feel a lot better about yourself and start to see your credit score improve.

About Natalie Rutledge

Natalie Rutledge majored in Communications at Mississippi State University. She was in sales for a number of businesses and spent nine years working as a communications advisor to various entities. Natalie can be contacted directly at [email protected]

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Editorial Note: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer affiliate program. See the online application for details about terms and conditions for these offers. Every reasonable effort has been made to maintain accurate information, however all credit card information is presented without warranty. After you click on an offer you will be directed to the credit card issuer's web site where you can review the terms and conditions for your offer.

Advertiser Disclosure: LowCards.com is an independent, for-profit web site. LowCards.com participates in the Affiliate Network, and receives compensation from most of the credit card issuers whose offers appear on the site. This compensation helps support our website and enables us to write insightful articles to help you manage your credit card accounts. This compensation, as well as the likelihood of applicants' credit approval and our own proprietary website guidelines, may impact how and where the cards appear on our site.

LowCards.com does not include all credit card companies or every available credit card offer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Every reasonable effort has been made to maintain accurate information, however credit card offers change frequently. After you click on an offer you will be directed to the credit card issuer's secure web site where you can review the terms and conditions for your offer.